Maiden Holdings, Ltd. Announces First Quarter 2017 Financial Results

 | Source: Maiden Holdings, Ltd. Maiden Holdings, Ltd.

Highlights for the quarter ended March 31, 2017

  • Net income attributable to Maiden common shareholders of $20.5 million, or $0.23 per diluted common share compared with net income attributable to Maiden common shareholders of $27.2 million, or $0.35 per diluted common share in the first quarter of 2016;
  • Non-GAAP operating earnings(1) of $22.6 million, or $0.26 per diluted common share compared with non-GAAP operating earnings of $28.3 million, or $0.37 per diluted common share in the first quarter of 2016;
  • Annualized return on average common equity of 7.9% compared to 11.9% in the first quarter of 2016;
  • Annualized non-GAAP operating return on average common equity(7) of 8.7% compared to 12.3% in the first quarter of 2016;
  • Gross premiums written increased 6.9% to $923.4 million compared to the first quarter of 2016;
  • Net premiums written increased 13.6% to $900.5 million compared to the first quarter of 2016;    
  • Combined ratio(12) of 100.9% compared to 98.9% in the first quarter of 2016;
  • Net investment income of $42.2 million increased 16.1% compared to $36.3 million in the first quarter of 2016; and
  • Book value per common share(4) of $12.19 increased 0.6% compared to year-end 2016.

HAMILTON, Bermuda, May 08, 2017 (GLOBE NEWSWIRE) -- Maiden Holdings, Ltd. (NASDAQ:MHLD) (“Maiden” or “the Company”) today reported first quarter 2017 net income attributable to Maiden common shareholders of $20.5 million or $0.23 per diluted common share compared to net income attributable to Maiden common shareholders of $27.2 million or $0.35 per diluted common share in the first quarter of 2016.  Non-GAAP operating earnings(1) were $22.6 million, or $0.26 per diluted common share compared with non-GAAP operating earnings of $28.3 million, or $0.37 per diluted common share in the first quarter of 2016.

Commenting on the Company's results, Art Raschbaum, Chief Executive Officer of Maiden, said: “Notwithstanding a challenging operating environment, Maiden’s results improved significantly from the Company’s fourth quarter 2016 underwriting loss. While the aggregate combined ratio for the quarter was 100.9%, it reflects the impact of more conservative initial expected loss ratios for the AmTrust master quota share as well as higher than anticipated losses in the quarter from select casualty lines.  Gross revenues increased by 6.9% across our two operating segments while investment income also reflected strong year-on-year growth of 16.1%.   We believe that we are well positioned to continue to further strengthen returns for the balance of the year while continuing to implement new business initiatives across the Company.”

Results for the quarter ended March 31, 2017
Maiden reported first quarter 2017 net income attributable to Maiden common shareholders of $20.5 million or $0.23 per diluted common share compared to net income attributable to Maiden common shareholders of $27.2 million or $0.35 per diluted common share in the first quarter of 2016.   The non-GAAP operating earnings(1) were $22.6 million, or $0.26 per diluted common share compared with non-GAAP operating earnings of $28.3 million, or $0.37 per diluted common share in the first quarter of 2016.

In the first quarter of 2017, gross premiums written increased 6.9% to $923.4 million from $864.1 million in the first quarter of 2016.  Gross premiums written in the Diversified Reinsurance segment totaled $332.0 million, an increase of 5.1% versus the first quarter of 2016 due to a combination of new business and growth from existing client relationships.  In the AmTrust Reinsurance segment, gross premiums written were $591.4 million, an increase of 7.9% compared to $548.3 million in the first quarter of 2016. 

Net premiums written totaled $900.5 million in the first quarter of 2017, an increase of 13.6% compared to the first quarter of 2016.  Net premiums written increased in the first quarter due to premium growth in both operating segments, as well as a lower proportion of premiums ceded compared to the prior year period.  

Net premiums earned were $709.5 million, an increase of 15.2% compared to the first quarter of 2016.  In the Diversified Reinsurance segment, net premiums earned increased 17.2% to $201.8 million compared to the first quarter of 2016.  The AmTrust Reinsurance segment net premiums earned were $507.6 million, up 14.4% compared to the first quarter of 2016.  Maiden’s year-over-year increase in net premiums earned was due to a lower utilization of retrocessional capacity.  

Net loss and loss adjustment expenses of $480.6 million were up 19.1% compared to the first quarter of 2016.  The loss ratio(8) of 67.4% was higher than the 65.0% reported in the first quarter of 2016.

Commission and other acquisition expenses, increased 13.8% to $222.0 million in the first quarter of 2017, compared to the first quarter of 2016.  The expense ratio(11) decreased to 33.5% for the first quarter of 2017 compared with 33.9% in the same quarter last year.  General and administrative expenses for the first quarter of 2017 totaled $17.4 million, a 12.4% increase compared with $15.5 million in the first quarter of 2016. The general and administrative expense ratio(10) was 2.4% in the first quarter of 2017, compared to 2.5% in the first quarter of 2016. 

The combined ratio(12) for the first quarter of 2017 totaled 100.9% compared with 98.9% in the first quarter of 2016.  The Diversified Reinsurance segment combined ratio was 99.9% in the first quarter of 2017 compared to 102.9% in the first quarter of 2016.  The Diversified Reinsurance results in the first quarter last year were impacted by adverse development of U.S. commercial auto business, which was not a significant factor in the first quarter of 2017. The AmTrust Reinsurance segment combined ratio was 99.8% in the first quarter of 2017 compared to 95.3% in the first quarter of 2016, partially due to a higher initial loss ratio on the master quota share.      

Net investment income of $42.2 million in the first quarter of 2017 increased 16.1% compared to the first quarter of 2016.  As of March 31, 2017, the average yield on the fixed income portfolio (excluding cash) is 3.29% with an average duration of 5.06 years.  Cash and cash equivalents were $193.2 million at March 31, 2017 or $43.7 million higher than at year-end 2016.

Total assets increased 4.9% to $6.6 billion at March 31, 2017 compared to $6.3 billion at year-end 2016.   Shareholders' equity was $1.4 billion, up 0.7% compared to December 31, 2016.  Book value per common share(4) was $12.19 at March 31, 2017 or 0.6% higher than at December 31, 2016.
  
During the first quarter of 2017, the Board of Directors declared dividends of $0.15 per common share, $0.515625 per Series A preference share and $0.445313 per Series C preference share.

(1)(4)(7) Please see the Non-GAAP Financial Measures table for additional information on these non-GAAP financial measures and reconciliation of these measures to GAAP measures.

(8)(10)(11)(12) Loss ratio, general and administrative expense ratio, expense ratio and combined ratio are non-GAAP operating metrics. Please see the additional information on these measures under Non-GAAP Financial Measure tables.

Conference Call

Maiden’s Chief Executive Officer, Art Raschbaum and Chief Financial Officer, Karen Schmitt will review these results tomorrow via teleconference and live audio webcast beginning at 8:30 a.m. ET.

To participate in the conference call, please access one of the following at least five minutes prior to the start time: 

U.S. Callers: 1.877.734.5373

Outside U.S. Callers: 1.973.200.3059

Passcode: 11534370

Webcast: http://www.maiden.bm/news_events 

A replay of the conference call will be available beginning at 11:30 a.m. ET on May 9, 2017 through 11:30 a.m. ET on May 16, 2017. To listen to the replay, please dial toll free: 1.855.859.2056 (U.S. Callers) or toll: 1.404.537.3406 (callers outside the U.S.) and enter the Passcode: 11534370; or access http://www.maiden.bm/news_events

About Maiden Holdings, Ltd.

Maiden Holdings, Ltd. is a Bermuda-based holding company formed in 2007.  Through its subsidiaries, which are each A rated (excellent) by A.M. Best, the Company is focused on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the United States and Europe. As of March 31, 2017, Maiden had $6.6 billion in assets and shareholders' equity of $1.4 billion.

The Maiden Holdings, Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5006 

Forward Looking Statements

This release contains "forward-looking statements" which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those projected as a result of significant risks and uncertainties, including non-receipt of the expected payments, changes in interest rates, effect of the performance of financial markets on investment income and fair values of investments, developments of claims and the effect on loss reserves, accuracy in projecting loss reserves, the impact of competition and pricing environments, changes in the demand for the Company's products, the effect of general economic conditions and unusual frequency of storm activity, adverse state and federal legislation, regulations and regulatory investigations into industry practices, developments relating to existing agreements, heightened competition, changes in pricing environments, and changes in asset valuations. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected is contained in Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 as updated in periodic filings with the SEC. The Company undertakes no obligation to publicly update any forward-looking statements, except as may be required by law.

 

Maiden Holdings, Ltd.
Consolidated Balance Sheets 
(in thousands (000's), except per share data)
 
     
   March 31, 2017
(Unaudited)		  December 31, 2016
(Audited)
Assets      
Fixed maturities, available-for-sale, at fair value (Amortized cost 2017: $3,993,941; 2016: $4,005,642) $  3,967,907  $  3,971,666
Fixed maturities, held-to-maturity, at amortized cost (Fair value 2017: $767,657; 2016: $766,135)    750,554     752,212
Other investments, at fair value (Cost 2017: $10,074; 2016: $10,057)    13,534     13,060
Total investments    4,731,995     4,736,938
Cash and cash equivalents    83,537     45,747
Restricted cash and cash equivalents    109,697     103,788
Accrued investment income    36,179     36,517
Reinsurance balances receivable, net    615,556     410,166
Reinsurance recoverable on unpaid losses    108,777     99,936
Loan to related party    167,975     167,975
Deferred commission and other acquisition expenses, net    472,459     424,605
Goodwill and intangible assets, net    77,183     77,715
Other assets    153,601     148,912
Total Assets $  6,556,959  $  6,252,299
Liabilities and Equity      
Liabilities      
Reserve for loss and loss adjustment expenses $  2,991,604  $  2,896,496
Unearned premiums    1,670,884     1,475,506
Accrued expenses and other liabilities    172,886     167,736
Senior notes      
Principal amount    362,500     362,500
Less unamortized debt issuance costs    11,012     11,091
Senior notes, net    351,488     351,409
Total Liabilities    5,186,862     4,891,147
       
Equity      
Preference Shares    315,000     315,000
Common shares    876     873
Additional paid-in capital    750,694     749,256
Accumulated other comprehensive income    15,591     14,997
Retained earnings    293,164     285,662
Treasury shares, at cost    (5,566)    (4,991)
Total Maiden Shareholders’ Equity    1,369,759     1,360,797
Noncontrolling interest in subsidiaries    338     355
  Total Equity    1,370,097     1,361,152
  Total Liabilities and Equity $  6,556,959  $  6,252,299
       
Book value per common share(4) $  12.19  $  12.12
       
Common shares outstanding  86,553,324  86,271,109
       


Maiden Holdings, Ltd.
Consolidated Statements of Income
(in thousands (000's), except per share data)
(Unaudited)
      
      
 For the Three Months Ended
March 31,
 2017 2016
Revenues:   
Gross premiums written$  923,427  $  864,114
      
Net premiums written$  900,548  $  792,831
Change in unearned premiums   (191,064)    (176,822)
Net premiums earned   709,484    616,009
Other insurance revenue   3,781    4,826
Net investment income   42,157    36,302
Net realized gains on investment    885    2,277
Total other-than-temporary impairment losses   -     - 
Portion of loss recognized in other comprehensive income (loss)   -     - 
Net impairment losses recognized in earnings   -     - 
Total revenues   756,307    659,414
Expenses:     
Net loss and loss adjustment expenses ("loss and LAE")   480,569    403,621
Commission and other acquisition expenses    222,029    195,068
General and administrative expenses   17,414    15,496
Total expenses   720,012    614,185
      
Non-GAAP income from operations(2)   36,295     45,229
      
Other expenses     
Interest and amortization expenses   (6,856)    (7,265)
Amortization of intangible assets   (533)    (615)
Foreign exchange (losses) gains   (1,921)    267
Total other expenses   (9,310)    (7,613)
      
Income before income taxes   26,985     37,616
Less: income tax expense   484    787
      
Net income   26,501     36,829
Add: loss attributable to noncontrolling interest   22    64
Net income attributable to Maiden    26,523     36,893
Dividends on preference shares(6)   (6,033)    (9,677)
Net income attributable to Maiden common shareholders$  20,490  $  27,216
      
Basic earnings per common share attributable to Maiden shareholders$  0.24  $  0.37
Diluted earnings per common share attributable to Maiden shareholders$  0.23  $  0.35
Dividends declared per common share$  0.15  $  0.14
Annualized return on average common equity 7.9%  11.9%
      
Weighted average number of common shares - basic   86,350,850    73,871,277
Adjusted weighted average number of common shares and assumed conversions - diluted   87,436,604    85,799,377
      


Maiden Holdings, Ltd.
Supplemental Financial Data - Segment Information
(in thousands (000's))
(Unaudited)
                
                
For the Three Months Ended March 31, 2017 Diversified
Reinsurance		  AmTrust
Reinsurance		  Other  Total
Gross premiums written $332,045  $591,382  $-  $923,427
Net premiums written $327,496  $573,052  $-  $900,548
Net premiums earned $201,842  $507,642  $-  $709,484
Other insurance revenue  3,781   -   -   3,781
Net loss and LAE  (138,649)   (341,631)   (289)   (480,569)
Commissions and other acquisition expenses  (57,945)   (164,084)   -   (222,029)
General and administrative expenses  (8,730)   (805)   -   (9,535)
Underwriting income (loss)  $299  $1,122  $(289)  $1,132
                
Reconciliation to net income               
Net investment income and realized gains on investment              43,042
Interest and amortization expenses              (6,856)
Amortization of intangible assets              (533)
Foreign exchange losses              (1,921)
Other general and administrative expenses              (7,879)
Income tax expense              (484)
Net income             $26,501
                
Net loss and LAE(8)  67.5%   67.3%       67.4%
Commission and other acquisition expense ratio(9)  28.2%   32.3%       31.1%
General and administrative expense ratio(10)  4.2%   0.2%       2.4%
Expense ratio(11)  32.4%   32.5%       33.5%
Combined ratio(12)  99.9%   99.8%       100.9%
                
                
                
For the Three Months Ended March 31, 2016 Diversified
Reinsurance		  AmTrust
Reinsurance		  Other  Total
Gross premiums written $315,804  $548,310  $-  $864,114
Net premiums written $286,136  $506,695  $-  $792,831
Net premiums earned $172,256  $443,753  $-  $616,009
Other insurance revenue  4,826   -   -   4,826
Net loss and LAE  (119,076)   (281,774)   (2,771)   (403,621)
Commissions and other acquisition expenses  (54,531)   (140,538)   1   (195,068)
General and administrative expenses  (8,600)   (586)   -   (9,186)
Underwriting (loss) income  $(5,125)  $20,855  $(2,770)  $12,960
                
Reconciliation to net income               
Net investment income and realized gains on investment              38,579
Interest and amortization expenses              (7,265)
Amortization of intangible assets              (615)
Foreign exchange gains              267
Other general and administrative expenses              (6,310)
Income tax expense              (787)
Net income              $36,829
                
Net loss and LAE(8)  67.2%   63.5%       65.0%
Commission and other acquisition expense ratio(9)  30.8%   31.7%       31.4%
General and administrative expense ratio(10)  4.9%   0.1%       2.5%
Expense ratio(11)  35.7%   31.8%       33.9%
Combined ratio(12)  102.9%   95.3%       98.9%
                


Maiden Holdings, Ltd.
Non - GAAP Financial Measure
(in thousands (000's), except per share data)
(Unaudited)
       
       
 For the Three Months Ended
March 31,
 
  2017 2016 
     
Non-GAAP operating earnings attributable to Maiden common shareholders(1)$22,638 $28,347 
Non-GAAP basic operating earnings per common share attributable to Maiden shareholders$0.26 $0.38 
Non-GAAP diluted operating earnings per common share attributable to Maiden shareholders$0.26 $0.37 
Annualized non-GAAP operating return on average common equity(7) 8.7%  12.3% 
       
Reconciliation of net income attributable to Maiden common shareholders to non-GAAP operating earnings attributable to Maiden common shareholders:      
Net income attributable to Maiden common shareholders$20,490 $27,216 
Add (subtract)      
Net realized gains on investment (885)  (2,277) 
Foreign exchange losses (gains) 1,921  (267) 
Amortization of intangible assets 533  615 
Divested excess and surplus "E&S" business and NGHC run-off 289  2,770 
Non-cash deferred tax expense 290  290 
Non-GAAP operating earnings attributable to Maiden common shareholders(1)$  22,638  $  28,347  
       
Reconciliation of diluted earnings per common share attributable to Maiden shareholders to non-GAAP diluted operating earnings per common share attributable to Maiden shareholders:      
Diluted earnings per common share attributable to Maiden shareholders$0.23 $0.35 
Add (subtract)      
Net realized gains on investment (0.01)  (0.03) 
Foreign exchange losses 0.02  -   
Amortization of intangible assets 0.01  0.01 
Divested excess and surplus "E&S" business and NGHC run-off -    0.03 
Non-cash deferred tax expense 0.01  0.01 
Non-GAAP diluted operating earnings per common share attributable to Maiden shareholders$  0.26  $  0.37  
       
Reconciliation of net income attributable to Maiden to non-GAAP income from operations:      
Net income attributable to Maiden$26,523 $36,893 
Add (subtract)      
Foreign exchange losses (gains) 1,921  (267) 
Amortization of intangible assets 533  615 
Interest and amortization expenses 6,856  7,265 
Income tax expense 484  787 
Loss attributable to noncontrolling interest (22)  (64) 
Non-GAAP income from operations(2)$  36,295  $  45,229  
       


Maiden Holdings, Ltd.
Non - GAAP Financial Measure
(in thousands (000's), except per share data)
(Unaudited)
       
       
       
  March 31, 2017 December 31, 2016
Investable assets:     
Total investments$4,731,995 $4,736,938
Cash and cash equivalents 83,537  45,747
Restricted cash and cash equivalents 109,697  103,788
Loan to related party 167,975  167,975
Total investable assets(3)$5,093,204  $5,054,448
       
  March 31, 2017 December 31, 2016
Capital:     
Preference shares$315,000 $315,000
Common shareholders' equity 1,054,759  1,045,797
Total Maiden shareholders' equity 1,369,759  1,360,797
2016 Senior Notes 110,000  110,000
2013 Senior Notes 152,500  152,500
2012 Senior Notes 100,000  100,000
Total capital resources(5)$1,732,259  $1,723,297
       
       
       
(1) Non-GAAP operating earnings is a non-GAAP financial measure defined by the Company as net income attributable to Maiden common shareholders excluding realized and unrealized investment gains and losses, foreign exchange and other gains and losses, amortization of intangible assets, divested excess and surplus business and NGHC run-off and non-cash deferred tax expense and should not be considered as an alternative to net income. The Company's management believes that non-GAAP operating earnings is a useful indicator of trends in the Company's underlying operations. The Company's measure of non-GAAP operating earnings may not be comparable to similarly titled measures used by other companies.
       
(2) Non-GAAP income from operations is a non-GAAP financial measure defined by the Company as net income attributable to Maiden excluding foreign exchange and other gains and losses, amortization of intangible assets, interest and amortization expenses, income tax expense and income or loss attributable to noncontrolling interest and should not be considered as an alternative to net income.  The Company’s management believes that non-GAAP income from operations is a useful measure of the Company’s underlying earnings fundamentals based on its underwriting and investment income before financing costs. This income from operations enables readers of this information to more clearly understand the essential operating results of the Company. The Company’s measure of non-GAAP income from operations may not be comparable to similarly titled measures used by other companies.
       
(3) Investable assets is the total of the Company's investments, cash and cash equivalents and loan to a related party.
       
(4) Book value per common share is calculated using Maiden common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding.
       
(5) Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity.
       
(6) Dividends on preference shares consist of $3,094 paid to Preference shares - Series A for the three months ended March 31, 2017 and 2016 and $2,939 and $3,593 paid to Preference shares - Series C for the three months ended March 31, 2017 and 2016, respectively. It also includes $2,990 paid to Preference Shares - Series B during the three months ended March 31, 2016. On September 15, 2016, each of then outstanding Preference share - Series B were automatically converted into 12,069,090 of the Company's common shares at a conversion rate of 3.6573 per preference share.
       
(7) Non-GAAP operating return on average common equity is a non-GAAP financial measure. Management uses non-GAAP operating return on average common shareholders' equity as a measure of profitability that focuses on the return to Maiden common shareholders. It is calculated using non-GAAP operating earnings attributable to Maiden common shareholders divided by average Maiden common shareholders' equity.
       
(8) Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.
       
(9) Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.
       
(10) Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.
       
(11) Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio.
       
(12) Calculated by adding together the net loss and LAE ratio and the expense ratio.

            











    

        

        
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